Michigan’s Drug Pricing Proposal Would Cripple Innovation

From cutting-edge advancements in automobile production to lifesaving developments in medical devices and medicines, Michigan manufacturers are global innovators and at the top of their game. As detailed in the National Association of Manufacturers’ recent economic analysis, the manufacturing industry in Michigan spent $17.2 billion on research and development (R&D) in 2015, ranking it fourth nationally. One key to this success is ensuring all manufacturers’ intellectual property rights continue to be protected.

Unfortunately, legislation currently being debated in Lansing threatens manufacturers’ intellectual property protections. House Bill (HB) 5223, a proposed drug pricing transparency bill, would require manufacturers that distribute prescription medicines in Michigan of a certain cost to submit a substantial amount of proprietary data, including costs associated with R&D, to the state Department of Health and Human Services, with no protections for the data submitted.

Manufacturers understand the need to reduce health care costs, but we have serious concerns related to the long-term implications of pharmaceutical transparency proposals. Protection of trade secrets and other forms of intellectual property are a fundamental necessity for manufacturers to succeed in today’s intensely competitive global marketplace.

The latest proposal in Michigan sends a wrong signal to the researchers, inventors and innovators who constitute the manufacturing community in Michigan and the rest of the nation who are constantly thinking of new ways to innovate, grow their businesses and serve their customers. For the biopharmaceutical industry, this kind of so-called “transparency” legislation would stifle innovation and impede the ability of companies to bring new, lifesaving medicines to market all while failing in its intent to contain health care costs.

Policymakers in Michigan and at the federal level should work to create opportunities that help innovators attract and retain investment. The NAM opposes any efforts that invalidate longstanding intellectual property and trade secrets protections and force manufacturers of medicines to heed new government-driven demands that are contrary to basic free market principles.

The manufacturing industry employs more than 604,500 Michiganders in high-skilled and high-wage jobs—the nation’s third-highest manufacturing state measured by employment. State lawmakers who value these critical jobs and the state’s innovative manufacturing sector should reject the proposed legislation.